Legal agreements for biodiversity net gain

Biodiversity net gain (BNG) is now mandatory for all new property developments in England. Our agriculture & estates team details the changes below.

Since 2 April 2024, grant of planning permission for the construction of one or more dwellings is conditional on a biodiversity net gain to natural habitats of at least 10%.

Though there are some exemptions for self-build and custom housebuilding applications, these new regulations demand significant adaptations to the legal agreements related to all future housing development.

Biodiversity net gain

To determine the BNG, the biodiversity value of onsite habitats before a development commences is compared against the (expected) biodiversity value of enhanced habitats allocated to the development.

Biodiversity value is calculated according to a biodiversity metric, based on such factors as the size, condition, strategic significance and type of habitat being assessed.

Legal agreements

In order to achieve the required BNG, the landowner/developer will need to enter into a legal agreement to:

• improve the onsite habitat
• enhance an offsite habitat and assign its biodiversity gain to their development
• purchase ‘biodiversity credits’; or
• a combination of the three.

The legal agreement is typically either in the form of a planning obligation – known as a Section 106 agreement – made with the local planning authority, or a conservation covenant with a designated responsible body such as Natural England.

The agreement will set out:

• ongoing monitoring of the habitat, including how this is funded and who is to be responsible for it
• access arrangements for the responsible party, ensuring that the necessary consents and licences are in place
• the term of the agreement, with a mandate that the habitat improvement is maintained for a minimum of 30 years
• what alterations can be made to the habitat improvement plan over the agreed period, and how any disputes are to be managed.

Opportunities for landowners & developers

If you are a landowner or developer, there are opportunities for you to benefit when:

• the BNG of your onsite habitat is in excess of your requirements
• you were already funding the enhancement of habitats offsite of your development without it being considered as BNG
• you have an existing development that was not subject to BNG; and/or
• you have land available to use for habitat enhancement.

You may then be able to sell ‘biodiversity units’ to other developers, to allow them to meet their BNG requirements.

Your land will ideally be close to a proposed development and contain habitats of strategic significance, as these are favoured by the biodiversity metric. Offsite habitat BNG must be registered on the ‘Biodiversity Gain Site Register’ and be underpinned by legal agreement in the same way as onsite habitat enhancement.

Where neither onsite nor offsite habitat enhancement is a viable option to meet a development’s BNG requirement, statutory ‘biodiversity credits’ can instead be purchased, with the proceeds used to enhance natural habitats across England. However, this can only be done as a last resort and will be costly.

If the terms of your legal agreement are not adhered to, a landowner/developer can be subject to enforcement action by the local planning authority or responsible body with whom the agreement was made.

Please contact us if you have any questions or queries in relation to these types of legal agreements.

Our Legal 500 and Chambers-rated agriculture & estates team help businesses or individuals operating in the rural sector, advising on a broad range of challenges that may arise.